Are not-for-profits learning from for-profit-organizations? A look into governance

Abstract

Purpose–This paper aims to focus on governance theories and practice variables in Not-For-Profit Service Organizations. The research answers two questions: what the prevalent governance practices of Not-for-Profit Service Organizations (NPSO) are, and whether there is a crossover among NPSO governance practices and For-Profit-Organization theories in the literature.Design/methodology/approach–A questionnaire to the 285 organizations within the defined parameters obtained a 18 percent response. Data were collected regarding the boards' predominant roles in the organizations' governance activities, the top executives' predominant roles in the organizations' operations and their interrelationship with the boards, and the boards' most common meeting agenda topics.Findings–The findings prove that governance models in NPSO are mostly driven by Agency Theory (52 percent of the sample). Stewardship and Resource Dependence Theories also contribute to existing governance models (28 percent), while some of the organizations have developed Hybrid Models (20 percent) drawing from the various theories.Research limitations/implications–The limited number of organizations participating in the research does not allow a generalization. However the diversity of organization types and sizes within the scope do provide a panoramic view of the not-for-profit service sector.Practical implications–Having proved that there is a crossover of governance practices among For-Profit and Not-for Profit Organizations, this research opens the door to the evaluation of many other existing or potential crossovers in governance and other management elements.Originality/value–This research is novel in its approach to look for similarities rather than differences between For-Profit and Not-for-Profit Organizations. The approach allows both sectors to learn from each other and seek for fresh improvement alternatives.